Daily Market Update
February 25, 2026EUR/USD ranged from the mid 1.17’s to low 1.18’s overnight. After fluctuating in a relatively wide range at the beginning of the week, EUR/USD edged lower on Tuesday but managed to find support.
The pair was last seen trading moderatly higher on the day, at around 1.1800.
The positive shift seen in risk mood made it difficult for the US Dollar (USD) to preserve its strength and helped EUR/USD hold its ground.
Wall Street’s main indexes recovered decisively on Tuesday after suffering large losses on Monday, as the negative impact of the uncertainty surrounding the US trade policy faded away.
In his State of the Union speech, US President Donald Trump said that there is no inflation and there is “tremendous growth,” pointing to tariffs as one of the main reasons behind the economic turnaround.
Trump further added that almost all trading partners want to keep the trade deals they already made despite the Supreme Court’s ruling.
Early Wednesday, US stock index futures rise about 0.2%. Anoter day of bullish action in Wall Street could allow EUR/USD to stretch higher in the near term.
The GBP/USD pair drifts lower for the second straight day on Tuesday and drops to over a one-week low, around mid-1.3500s, during the early European session following the release of the UK jobs report.
The Office for National Statistics (ONS) reported that the ILO UK Unemployment Rate climbed to 5.2% in the three months to December, from 5.1% the prior month, marking the highest level since early 2021.
Additional details showed that the number of people claiming jobless benefits rose to 28.8K in January, pointing to continued softening in the UK labour market at the start of 2026.
Furthermore, the rate of annual wage growth also moderated during the reported period, dropping to its lowest level in almost four years.
In fact, Average Earnings Excluding Bonus increased 4.2% in the three months ended December, down from 4.6% in the previous quarter, while the gauge including bonuses slowed to 4.2% from the former reading of 4.6%.
Barring any surprises from the UK consumer inflation figures, due for release on Wednesday, the latest employment details reaffirm bets for a March interest rate cut by the Bank of England (BoE) and weigh on the British Pound (GBP).
The US Dollar (USD), on the other hand, climbs to over a one-week high and turns out to be another factor exerting downward pressure on the GBP/USD pair.
The USD, however, lacks bullish conviction amid dovish Federal Reserve (Fed) expectations. In fact, traders ramped up their bets that the US central bank will lower borrowing costs in June following the release of softer US consumer inflation figures last Friday.
Moreover, the current market pricing indicates a higher possibility of at least two rate cuts in 2026, which, along with threats to the Fed’s independence, caps the upside for the USD.
Despite the US Federal Reserve’s (Fed) hawkish outlook, the US Dollar (USD) meets with a fresh supply as investors remain concerned about renewed turbulence over US President Donald Trump’s trade policies.
This, along with geopolitical risks, underpins demand for traditional safe-haven assets, including the Japanese Yen (JPY), and prompts some intraday selling around the USD/JPY pair.
Meanwhile, reports suggest that Japan’s Prime Minister Sanae Takaichi was apprehensive about more rate hikes in a meeting last week with the Bank of Japan (BoJ) Governor Kazuo Ueda.
Moreover, the government nominated two reflationists to join the BoJ board, forcing investors to trim expectations about the speed of interest rate hikes.
This caps gains for the JPY and offers some support to the USD/JPY pair.
From a technical perspective, the recent repeated rebounds from the 200-day Exponential Moving Average (EMA) breakout zone and the subsequent move up favor bullish traders.
The Moving Average Convergence Divergence (MACD) line has turned higher above its signal and is now back in positive territory, suggesting improving upside momentum after a mid-month loss of traction.
The Relative Strength Index around 54 stays above its midline without approaching overbought, aligning with a gradual recovery.
Source FX Street
